March 27, 1980 _ Silver Markets Tumble
The anniversary – 32 years ago – of when infamous Bunky Hunt, the Oil Baron of Texas, came to the end of his efforts to corner the silver market.
The price of silver fell 10% in a single day, which was cause for World Wide Headlines in 1980.
Today of course, we have experienced many single day enormous disruptions to the stock market, but this was an event of significant importance in 1980
Nelson Bunker Hunt, attempted to corner the silver market, and succeeded, if only briefly
There is really nothing ever new in the silver market. Today evokes memories of Silver Thursday, March 27, 1980, when there was panic in the markets over the price of silver as traders everywhere tried all at the same time to liquidate their positions in silver.
Current Dramatic Moves in the Precious Metals Markets
Last year the dramatic fall in precious metals was not due to a similar failed attempt to corner the silver and gold markets as happened 32 years prior. Last year, and in so many other instances, “Programmed Trading” and widespread “Stop Losses” caused a more precipitous fall, and the falls have been more severe than Infamous Silver Thursday.
A far more important question this year, is how was it that tried a redux of the Hunt brothers (and Warren Buffett of course), and when will someone take their place next? Seems to be always someone who has so much money that they forget their brains in ever more outrageous attempts to increase already fabulous wealth.
The market is a dynamic place, and these attempts, even in today’s era of fabulous money flows, usually fall as a result of their own weight.
Silver Thursday March 27, 1908
Silver had slow but continually increases in price over some decades until January 1979 when silver reached the high price of $6/oz. At that time, according to most observers, Bunky Hunt started accumulating silver in a serious fashion. The price of silver started to move up in ever more dramatic fashion, and Bunky kept accumulating, even as the price kept rising.
Traders started to notice, and more and more speculators started jumping on the bandwagon. Does this sound like the events leading up the Mortgage Based Asset meltdown of 2007 through 2009? It does to me. As always, there is nothing new, just history repeating itself in a slightly different fashion.
The price of silver peaked at $52, just before the crash. Mr. Hunt owned – depending on who you are listening to – between 50 million ounces and 150 million ounces of silver at the time of the crash. On Silver Thursday March 27, 1980 silver dropped $10/oz in a single day and the Hunts lost over $2 billion that day.
Historical Price of Silver
In the years 1975 thru 1979 silver averaged about $4.50 an ounce, then moved to a high if $52 in 1980, and then settled gradually back to the $10 range falling by 1986 to the $5.30 average, and then losing value until 1999 when it averaged in the mid $3.50 range.
Silver remained in the $3 to $8 range until 2005, when it rose suddenly to the $13 range, after which it varied dramatically with increasing volatility rising to the $50 level in 2011, and then then falling to the $30 range, where it now resides.
Gold’s Spike Compared to Silver’s Spike
It is interesting to compare the price of silver to the price of gold. Gold also spiked in 1980 reaching above $800 per ounce. That price however pales besides the $1,900 an ounce that gold recently reached before moderating somewhat to the $1,600 range in which it today resides.
Silver reached $52 in its frenzy in 1980, and only in 2011 did it reach that price again, before falling to today’s range of $30+
A Warning to Watchers
Does January’s breach of the $30 mark signify investors’ renewed confidence in silver, heralding the start of a potentially strong bull run? Or, will Eurozone troubles undermine industrial fabrication sufficiently to see prices soon weaken once more?
In my opinion, the price of gold is influenced far more by financial instability and varies accordingly, whereas the price of silver is based upon supply and demand. Demand is outstripping supply, so the price of silver will maintain or increase. We remain convinced that junior silver miners are the place to be.
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